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Democratic members of a congressional panel on Wednesday slammed Apple's iPhone for only offering cell phone service for the device from one provider.

The iPhone "highlights both the promise and the problems of the wireless industry today," said Rep. Edward Markey, D-Mass., chairman of the House Subcommittee on Telecom and the Internet. "This cutting edge technology breaks new ground [but] consumers can't use this service with other wireless carriers" and those in areas not reached by AT&T cannot use the iPhone at all, he said.

Apple signed an agreement with AT&T to serve as the sole cell phone service provider for the iPhone. Those who purchase the iPhone, therefore, must switch to AT&T in order for their phone to work, incurring cancellation fees from current providers and locking themselves into a two-year contract with AT&T.

"Consumers feel trapped," Markey said at a hearing about regulation in the wireless industry.

"The iPhone could still change the world and be available for any consumer on any network, but we won't know until 2012, the year that AT&T's American exclusivity runs out," said Rep. Mike Doyle, D-Pa. "I think it's time the consumer becomes a decider, not the cell phone carriers."

Rep. Fred Upton, R-Mich., was less concerned. "Competition spurs carriers to innovate and build a better mousetrap," he said. "The iPhone is the newest mousetrap and now other carriers will be working to top it."

Members convened the hearing to debate whether wireless service agreement regulation should be transferred from state public utility commissions (PUCs) to the federal government. The wireless industry has long favored a more national approach, but state PUCs are hesitant to give up control.

"Federal standards must be accompanied by a state enforcement mechanism," said Tony Clark, a commissioner with the North Dakota PUC. Relying on the federal government "would be folly," he said. The do-not-call list for telemarketers, for example, is technically in the hands of the feds, but "practice and enforcement has fallen almost exclusively to states."

"State regulators are seeking a middle ground that relies on the feds setting the standards that apply to all, [with] state enforcement," Clark said. "It's a partnership, not pre-emption."

Discussion, however, quickly turned to the upcoming FCC spectrum auction. When broadcasters switch from analog to digital signals by the February 2009 deadline, it will free up spectrum space on a band known as 700 megahertz. It is considered valuable spectrum because it can handle advanced technologies better than currently available bands of spectrum.

How that spectrum will be allocated and handled post-auction has been the subject of much debate. At issue Wednesday was the topic of "open access", a proposal before the FCC that would provide non-discriminatory and wholesale access to a specific swath of spectrum. Traditionally, spectrum has been gobbled up by large incumbents, but this "open access" approach could provide a limitless number of providers with access to wireless broadband services.

"We have allowed there to be a spectrum-based oligopoly and it's controlling the development of devices in the wireless sector," said Timothy Wu, a professor at Columbia Law School.

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"The FCC should seize this opportunity to create open access," said Rep. Markey.

Rep. Jane Harman, D-Calif., a vocal supporter of dedicating spectrum for public safety purposes, said she penned a letter to the FCC this week "urging that the auction include open access, wholesaling and a national, not regional approach. I hope the FCC is listening."

It was reported Tuesday that FCC Chairman Kevin Martin favors the open access approach, though no official FCC confirmation has been made.

Chloe Albanesius has been with PCMag.com since April 2007, most recently as Executive Editor for News and Features. Prior to that, she worked for a year covering financial IT on Wall Street for Incisive Media. From 2002 to 2005, Chloe covered technology policy for The National Journal's Technology Daily in Washington, DC. She has held internships at NBC's Meet the Press, washingtonpost.com, the Tate Gallery press office in London, Roll Call, and Congressional Quarterly. She graduated with a bachelor's degree in journalism from American University...
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